kjunior

paying down credit cards

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Does anybody know if paying down credit cards will increase your scores? trying to boost my scores for a mortgage loan. just want to make sure i'm not going to get a drop in scores.

Thanks

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i had one orchard bank card with a 300 limit. previous balance was 241 i paid it down to 116. then i have a 1st premier that was a 250 limit. previous balance was 220 i paid it down to $95. didn't want to pay them competely off until after the closing. i just got them to rebuild credit since my ch7 back in 03. my scores now are 613, 595, 674 i am needing about about another 30 points to get a better interest rate if that's possible with what i've done. i just made another monthly payment in march for my student loans, so hopefully i will get a good score increase.

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Paying down cards as much as possible helped my scores tremendously. Scores were around 610, payed down most of my cards 3 months prior to applying for a mortgage and at the time they pulled my scores they were in the 660's. I paid two cards completely off and the others down to about a third utilization. I would probably suggest paying down atleast 6 months prior if you can wait, to give the CR's enough time to report. Just my point of view. :D

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One thing I would recommend is not worrying so much about your credit based on a few basis points. I have worked with several clients that were so focused on their credit that they were missing out on special mortgage programs. These programs are setup to help qualify tarnished credit. A normal client with a 700+ score can walk into any major bank and not have a problem. My clients don't have these issues either because there brought on the wholesale side of banks. I can e-mail you some of the programs if you’re interested.

Kind regards,

Paul Bibbo

paul@paulbibbo.com

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Let's see....... if the credit is tarnished, then credit score will be the main issue in getting decent interest rates. I really like the special programs that will let you get into a mortgage now, just so you have to come back and refinance in a couple of years guaranteed. NOT

Kjunior, sounds like you are on the right path to getting your credit scores where they need to be. Also, what differences do you see in your credit reports that are casuing such a discrepency in your scores. Is everything reporting correctly, or are there errors left over after the bankruptcy that need to be addressed?

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I am actually in the same boat...trying to improve score for a mortgage loan.

I have no "bad" items...just near the limit on most of my cards. I just paid one cc with a $2200 limit down to $100 and I just paid my lowes card $1100 limit down to $50. All other cards are near their limit...I'm working on them one at a time...Question is...is it better to pay these cards off completely and close the accounts OR to keep them open and maintain the super low balance? OR would it be better to have the credit limits decreased on the cards and keep them open?

THank you in advance...just not sure which is the best way to handle this!

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Definitely keep the accounts open. Closing the accounts will most likely decrease your scores. The only exception to this rule would be if there are more than ten or so credit lines open.

Credit utilization is determined by the pecentage of credit used (outstanding balance) divided by the credit limit. Higher crdit limits will be a benefit, because it will lower the utilization percentage.

Example: $100.00 balance with a $500.00 limit would be 20% utilization. A credit limit of $250.00 dollars with a $100.00 balance would be 40% utilization. You want a low utilazation percentage.

If anything, ask for a credit line increase, but this may require a hard inquiry (which could lower your scores), but if accepted, would actually benefit your scores.

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What type of credit score do you need to get a decent mortgage rate? And if my fiance has not so good credit...would it be better to put it in my name now and add my fiance later....

Thanks so much for your advice!

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